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I assume you're talking about Spousal Benefits called the 'File and Suspend' strategy. A lot of people have gotten confused about the SS rules pertaining to this strategy - thinking that the collecting spouse receives his/her benefits plus half of the other spouse's benefits. This is not correct. (You appear to understand the eligibility correctly.)
Only when the weaker earner's benefits are less than half (50%) of the other spouse's benefits does the weaker earner qualify to receive 'extra' benefits. And the higher earner spouse must have reached full retirement age. For example, if Spouse A has benefits of say $600 and Spouse B has benefits of $1,500 then Spouse A will get a total of $750 (or $600 plus $150 extra added to their benefits), which brings the total benefits to $750 (50% of $1,500) or half of Spouse B's benefit. However, if Spouse A already has their benefit equal to 50% of the higher earner's benefit (e.g. $750 or more) then he/she does not qualify for 'File and Suspend" because with the weaker earner's own benefits they will already be receiving benefits equal to half or greater the other spouse's benefit.
I assume the government incorporated this strategy method, along with ex-spouse (divorced), to protect the weaker earner or non-wage earner. Years ago it was commonplace for the woman of the house to work fewer years than her husband, or not work at all, but instead to be a stay-at-home homemaker taking care of small children, etc. This benefit protected her from being totally left-out of collecting SS. Likewise, it protected the weaker earner spouse if they were divorced from the higher earner with greater benefits.
More and more married couples both earn a living nowadays, and both spouses earnings (and SS benefits) are more equal than years ago. Thus, the Spousal Benefit strategy "File and Suspend" is probably used less compared to years ago.
One thing I'm unsure of however. I'm not sure where this 'extra' money (paid to the < 50% weaker earner) comes from since it does not reduce either spouse's benefits (except the weaker earner spouse has a reduction in their own benefits because they started collecting before full retirement age...yet it does not reduce their benefits any further). I have to assume the extra money simply comes from the SS money pool...much like the money comes from the SS money pool to pay benefits to ex-spouses (i.e. divorced spouses), or to people that far outlive their life expectancy (I understand the actuary age keeps moving higher).
File and suspend or 62/70 is a strategy that is specific to the couples situation and goals. If you want to maximize the SS benefit to the surviving spouse it fits that objective. There is one big pool or resources applied to a specific benefit entitlement.
Even if the highest benefit spouse passes at 71 the goal has been accomplished. For us it is a death benefit planning. It enables a floor for the surving spouse that consists of both pensions, highest SS and investments. That helps with health care planning and perhaps most importantly nursing home planning.
I don't like the way you mention the non working stay at home mom as years ago, i.e. obsolete! Because you are talking about my situation here. It has been my fear for years that they would do away with the spousal benefit because "after all, no one stays home anymore everyone works" well I don't I never have, at first it was to care for my five children then later I became disabled, though because I had not worked and because my husbands makes a decent amount I never qualified for any disablity etc.
I am about to turn 59 now and husband is 61 so hopefully if they mess with things it won't affect us since I would hope to be grandfathered.
The second thing is the way you mention where the money comes from as if for the wage earner they have an account with money or something, ALL benefits come from that "general pool" there is no money , set aside, for anyone.
It's simply a fact that more wives have worked (earned a living) over the past four decades than before. It's no disrespect to those spouses that didn't - it's just a fact. Likewise, women's salaries have increased to [more] closely match the salaries of men for the same type work...even though it still has a ways to go. Thus, there are likely fewer people able to use the SS 'file and suspend' strategy...because they do not qualify (because both have more equal benefits based on their own earnings.
I doubt seriously that anyone above the age of say 50-55 will be affected by any future changes in SS benefits or startegies.
File and suspend or 62/70 is a strategy that is specific to the couples situation and goals. If you want to maximize the SS benefit to the surviving spouse it fits that objective. There is one big pool or resources applied to a specific benefit entitlement.
Even if the highest benefit spouse passes at 71 the goal has been accomplished. For us it is a death benefit planning. It enables a floor for the surving spouse that consists of both pensions, highest SS and investments. That helps with health care planning and perhaps most importantly nursing home planning.
The 'file and suspend' strategy is only available to married couples in which one spouse has benefits that equals less than half (<50%) that of the other spouse. If that's the case for you or anyone else, then it is a good strategy.
I realize that Social Security is paid from a pool of money. But...when 'extra' money (over and above the earned benefits) are paid out, one would naturally think that a reduction of benefits would be made somewhere to offset this 'extra' money that was paid. Much like when you collect SS early (before full retirement age) there is a reduction of benefits paid to you. In other words - there is no free extra money. But that's not teh case - because there is free 'extra' money available to some pople based on one spouse having less than 50% of the other spouse's benefits. The 'extra' money that is paid out to spouses that qualify for 'file and suspend' recipients obviously does not have an offsetting reduction...thus it truly is 'extra' (free) money that is pulled from the SS money pool. Some may, or may not, think this 'extra' (free) money, which is available to only some people, is fair...since not all SS recipients get 'extra' (free) money due to both spouses having similar benefits. It's just an observation...nothing more, nothing less.
My DH is 69 and collects SS of $1,500k per month. I am 56 and a ways off from collecting my own. But. When I turn 62, I can collect $550 per month. If I do that and my spouses passes away, what happens then? Am I better off not collecting the $550 at age 62? Will the $1,500 decrease by a huge amount?
Wel he is telling the tuth as its gotten more and more uncommon for the saty at hoe spouse to have never rowked and even earn enough credits to earn benefits on own account. The money to pay two benfits out oiof one account si more expensive. Especailly when you consider that social sedcurity is oneof the only such plans that elimnates the earnings of one of two workers when one dies. Not liking the truth is one thing but not realizing it is another altogethe.The wage eraner may not ahve a separate pool but they have a account and the benefits are from that account if a individaul account.Just as they don't charge two people drawig form the same account more to get more coverage.You are considered a dependent on your husbads accout no matter if you like it or not.You will see it when you husband dies as it will be his SS account number with a D added.
My DH is 69 and collects SS of $1,500k per month. I am 56 and a ways off from collecting my own. But. When I turn 62, I can collect $550 per month. If I do that and my spouses passes away, what happens then? Am I better off not collecting the $550 at age 62? Will the $1,500 decrease by a huge amount?
It would seem to me that you could collect close to half of your husbands SS, if he passes you get his and lose yours. Call SS on the phone they are very helpful.
My DH is 69 and collects SS of $1,500k per month. I am 56 and a ways off from collecting my own. But. When I turn 62, I can collect $550 per month. If I do that and my spouses passes away, what happens then? Am I better off not collecting the $550 at age 62? Will the $1,500 decrease by a huge amount?
The two benefits/programs are separate. The survivor's benefit will depend on your age at the time he dies.
See, How Much Would Your Benefit Be?
If he passes away after you reach full retirement age, you will receive 100% of his benefit. If you are younger than full retirement age, the benefit will be reduced accordingly.
The two benefits/programs are separate. The survivor's benefit will depend on your age at the time he dies.
See, How Much Would Your Benefit Be?
If he passes away after you reach full retirement age, you will receive 100% of his benefit. If you are younger than full retirement age, the benefit will be reduced accordingly.
I am under the impression that if the wage earner were to die before the spouse was full retirement age they could wait to receive survivor benefits untill they were full retirement age, is that different if they are already collecting their portion of the wage earners benefit when the wage earner retires?
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